2018 (11) TMI 1881 - Tri - Insolvency and Bankruptcy

NCLAT allows withdrawal under IBC Section 12A, emphasizes applicant's right.

The Hon'ble NCLAT allowed the Financial Creditor's withdrawal application under Section 12A of the IBC, 2016, in compliance with statutory provisions. The ... Seeking permission to withdraw the Petition under Section 12A of the IBC, 2016 - reservation of the applicant bank’s right as a secured creditor to realise the balance debt due outstanding under the loan account from M/s. Trio Fab (India) Pvt Ltd by initiating appropriate legal action/s and recovery measures - seeking directions to the Corporate Debtor to pay the CIRP expenses - HELD THAT:- It appears that Regulation 30A(1) specifically provides that the withdrawal permission can only be given before issue of invitation for expression of interest under Regulation 36A but Section 12A of the Code does not impose such restriction for withdrawing the petition. It is pertinent to mentioned that IBBI (IRP for Corporate Persons), the third amendment Regulation, 2018 is effective with effect from 3.7.2018 and it is specifically mentioned that it shall apply to CIRP commencing on or after 3.7.2018. In this case, undisputedly, the CIRP has been started by an order dated 18.5.2018, therefore, Regulation 30A is not applicable in this case. As per the provision of Section 12A condition was only that the application for withdrawal can be permitted only if the CoC with vote share of 90% has passed the resolution. Section 12A has been inserted by Act No.26 of 2018 with effect from 6.6.2018 but it is clarificatory in nature - Conditions laid down in Section 12A are satisfied because application for withdrawal has been supported with 100% voting share of CoC. Therefore, application filed by Federal Bank deserves to be allowed. Petition dismissed as withdrawn. Issues:1. Withdrawal of insolvency petition under Section 12A of the Insolvency and Bankruptcy Code, 2016.2. Compliance with regulations regarding withdrawal of petition.3. Applicability of Section 12A and Regulation 30A in the case.Analysis:1. The Financial Creditor, Federal Bank Ltd, filed MA 1421/2018 seeking permission to withdraw the insolvency petition under Section 12A of the IBC, 2016. The request also included directions for the Corporate Debtor to pay CIRP expenses. The Resolution Professional also filed MA 1379/2018 for withdrawal. The CoC minutes indicated Federal Bank's consent for withdrawal, as it was the sole financial creditor with 100% voting share.2. The Hon'ble NCLAT's order clarified that Regulation 30A cannot override Section 12A, emphasizing that only the applicant can move for withdrawal before the Adjudicating Authority. In compliance, Federal Bank filed for withdrawal, satisfying the statutory provision of Section 12A with 100% vote share. Regulation 30A(4) mandates the Resolution Professional to submit the application to the Adjudicating Authority within three days of CoC approval, but Section 12A does not impose such a restriction.3. The case highlighted the effective date of the third amendment Regulation, 2018, and its applicability to CIRPs commencing after 3.7.2018. Since the CIRP began before this date, Regulation 30A was deemed inapplicable. Section 12A, inserted by Act No.26 of 2018, was clarificatory and applicable due to the Supreme Court's directions. The conditions of Section 12A were met with 100% CoC voting share, leading to the allowance of Federal Bank's withdrawal application.In conclusion, MA 1421/2018 was disposed of, and Petition No CP (IB)- 1309/MB/2017 was dismissed as withdrawn, based on the satisfaction of Section 12A's conditions and the inapplicability of Regulation 30A in the case.